Steve can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. His roommate Mike can wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour.
a. The absolute advantage in laundry is held by
Steve, as he can complete the task in 2 hours compared to Mike's 3 hours.
b. The absolute advantage in meal preparation is held by both Steve and Mike, as they can both prepare a meal in 1 hour.
c. The comparative advantage in laundry is held by Steve, as he has a lower opportunity cost in terms of time spent. Steve can complete the laundry in 2 hours, which means he is giving up 1/2 hour of meal preparation time. Mike, on the other hand, would have to give up 3/1 hour of meal preparation time to complete the same amount of laundry.
d. The comparative advantage in meal preparation is unclear based on the information given. We would need more information to determine this.
b. The comparative advantage in meal preparation is held by
A. Steve
.
B. Mike